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November 09, 2012

Entrepreneurs' fear of failure is holding back UK economy

New research carried out for Barclays amongst 1,000 small businesses shows that fear of failure is holding many of them back. More than half of those polled (57%) admit that they have put off making important decisions in case they make the wrong call. And 48% admit their fear of failure has prevented or could prevent their business from growing.

Dubbed BoFFs (Businesses overcome by Fear of Failure) by the report authors, the research shows that these firms are concerned about many issues, including:

economic uncertainty (58%)

cash flow and late payments (32%)

increased competition (28%)

legislation and regulation (27%)

And these worries have altered the way many firms approach risk, says the report. Over half (51%) of the respondents say the economic environment has affected their approach to making business decisions. And over a quarter (27%) admit that economic uncertainty has made them much more hesitant about long-term decisions.

Sue Hayes, managing director of Barclays Business Banking, says this fear of failure could be impacting on the UK economy as a whole. She said: "The ability to make important decisions is vital to the growth of all businesses and the overall UK economy. At the time of making important business decisions, it's only natural to be scared of getting it wrong.

"It can feel like you are taking a big risk – whether that is decisions about staff, products, finance or even your marketing strategy. Despite the tough external environment, there are many opportunities to be seized upon."

Jon Cousins, psychological entrepreneur, said: "While risk aversion is a totally normal human response, the BoFF phenomenon is out of character when compared to the traditional risk-seeking behaviour we might expect of entrepreneurs. In the face of adversity a fear of failure can cause a freeze reaction amongst businesses, where it can often wrongly seem safest to do nothing at all."